FOAK Financing Guide

Governments have long partnered with the private sector to create strategically important national capabilities that markets alone could not deliver. From hospitals and transport infrastructure to electricity and water systems, governments have developed sophisticated financing and procurement frameworks that create revenue certainty, allocate risk and mobilise private capital to deliver those capabilities. This guide argues that first-of-a-kind (FOAK) clean commodity projects should be viewed and financed in much the same way as major infrastructure projects. They create strategically important national capabilities.

They involve large up front capital investments, long-lived assets and significant commercial risks that private investors can not efficiently bear alone. As a result, they require bankable commercial frameworks that allocate risk appropriately and provide sufficient revenue certainty to mobilise private capital.

Governments already possess sophisticated infrastructure financing and procurement capabilities that can be adapted to FOAK clean commodities projects. Yet policy has often focused narrowly on bridging the “green premium” through contracts for difference(CfDs), tax incentives and other market-support mechanisms. So far, these policies have not delivered the investment needed, with few Australian clean commodity projects reaching FID. While they can improve project economics, they often leave critical financing barriers unresolved. The key barrier is not simply profitability. It is bankability: whether future revenues are sufficiently certain, and risks appropriately allocated, to secure finance.